QVC-owner Liberty Interactive Corp. and HSN Inc. on Thursday announced that Liberty Interactive will acquire the 62% of HSNi it doesn’t already own in an all-stock transaction valued at $2.1 billion. The deal is expected to close in the fourth quarter of this year, the companies said in a press release.
Liberty Interactive owns 38.2% of HSNi and under the definitive agreement will acquire the remaining 61.8% stake, making it a wholly-owned subsidiary, attributed to the QVC Group tracking stock, according to a press release from the companies. HSNi shareholders will receive 1.65 shares of Series A QVC Group common stock for each common share of HSNi, a premium of $9.06 per share or 29% to HSNi shareholders, based on HSNi’s closing price on Wednesday.
The two companies together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and internet broadcast platforms, according to a statement from Liberty Interactive President and CEO Greg Maffei. “The value of the combined QVC, HSNi and zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures,” he said.
With this move, QVC has effectively gobbled up its rival in the broadcast-based direct-to-consumer market to create a powerhouse player across digital channels. HSNi had been enjoying a turnaround under CEO Mindy Grossman, who left in April to lead Weight Watchers but had positioned the company to take full advantage of the omnichannel expectations of today’s retail consumer. While HSN is known for its once ground-breaking TV retail (a still-thriving channel), the company has expanded online and added augmented reality and gamification. But profitability has remained a concern.
Meanwhile, QVC has earned high marks for delivering some of the retail industry's best overall customer experience, according to rankings assembled by research firm Temkin Group. Ace, BJ's and QVC tied for the top spot out of the 48 retailers in this year's report, each earning a score of 81% and coming in 8th place overall out of 331 companies across 20 industries.
The merger will provide a host of benefits to all players, according to a press release from the companies, including scale, meaningful synergies through cost reduction and revenue growth opportunities, development of e-commerce, mobile and OTT platforms, cross-marketing opportunities and financial optionality due to HSNi’s lower debt leverage.
“Joining the QVC Group will give us instant access to global consumer markets, a leadership team with deep expertise and a global perspective, and the opportunity to further strengthen our content-based brand portfolios in a changing retail landscape,” Arthur C. Martinez, HSNi’s chairman, said in a statement. “We have both been innovators in a growing and dynamic retail environment with a unique vision of what shopping should be, and as new technologies continue to change our everyday lives, together we can develop the next generation of shopping for the next generation of consumers.”
HSNi consists of HSN, aninteractive multichannel retailer, and Cornerstone, which is comprised of home and apparel lifestyle brands including Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements. Post-closing, HSNi headquarters will remain in St. Petersburg and will be overseen by Mike George, the companies said